stop-loss

Insurance: promise by a reinsurance company that it will cover losses incurred by the company it reinsures over and above an agreed-upon amount.

Stocks: customer order to a broker that sets the sell price of a stock below the current Market Price. A stop-loss order therefore will protect profits that have already been made or prevent further losses if the stock drops.

Protects a cedent against an aggregate amount of claims over a period, in excess of a specified percentage of the earned premium income. Stop loss reinsurance does not cover individual claims. The reinsurer's liability is limited to a stipulated percentage of the loss and/or a maximum dollar amount. The stop loss method protects the cedent against the possibility that the aggregate value of an accumulation of small losses will exceed a specified percentage of earned premium income of a particular class. Stop loss reinsurance is the exact opposite of the Quota Share Reinsurance and Surplus Reinsurance and differs considerably from other forms of Excess of Loss Reinsurance. For example, a reinsurer can provide a cedent with 50% of the amount by which aggregate incurred losses of the cedent in any year exceed 70% of the cedent's earned premium income during that year.

A general term referring to that category of coverage that provides insurance protection (reinsurance) to an employer for a self-funded plan.